McCrory signs order to crack down on employee misclassification

Gov. Pat McCrory has signed an executive order that seeks to crack down on companies that improperly classify their employees as independent contractors.

The order establishes an employee classification section within the North Carolina Industrial Commission to streamline information sharing among state agencies, The Mecklenburg Times reported. “An as-yet-unnamed director will serve as the primary point of contact for reported instances of employee misclassification,” according to the published report. “That individual also will refer complaints to the proper agency for investigation.”

The N.C. General Assembly has sought to tackle the issue of employee misclassification with proposed legislation that includes a fine of up to $1,000 on violators who misidentify employees, a practice used to avoid costs incurred from taxes and employee benefits. Bills in the N.C. House and N.C. Senate would also authorize state agencies to revoke licenses and permits while barring offenders from receiving state contracts for five years.

“The creation of the employee classification section is a significant first step in eliminating employee misclassification throughout our state,” McCrory said. “I look forward to working with the General Assembly to build upon our recent gains.”

The state legislature is scheduled to take up the issue again this spring when it reconvenes for the 2016 short session.

Betsy Bailey, N.C. the Carolinas Associated General Contractors (CAGC) government relations and building division director was quoted in the publication as lauding McCrory’s actions but said she hopes for more stringent legislation from the General Assembly next year.

“This is a good step in the right direction,” she said, “but fines and sanctions will put a little more teeth into it.”